The Pensions Infrastructure Platform (PiP) has confirmed its investment in the Thames tideway tunnel (TTT) project in UK.
PiP will be involved in the project via Dalmore Capital, who helped it secure over £370 million (US$570.6 million) of investment commitments from UK pension schemes. The total project investment is estimated at £4.2 billion (US$6.48 billion).
On 24 August 2015 the Bazalgette Tunnel Limited consortium received the licence from the Water Services Regulation Authority (Ofwat) to own and finance the project. Bazalgette team includes International Public Partnerships Limited (INPP), Allianz, Amber Infrastructure Group, Dalmore Capital Limited, DIF and Swiss Life Asset Managers.
The TTT is a new part of the sewerage network which will carry sewage and storm water discharges from the broader London sewerage system. It will be a 7.2 metre diameter 25 kilometre sewer tunnel running up to 65 metres below the River Thames. Starting in West London, the main tunnel will follow the route of the Thames to connect with the existing Lee Tunnel, with sewage being transferred to the Beckton Sewage Treatment Works in East London.
Construction is expected to commence in 2016 and reach completion by 2023. The project is expected to reduce the approximately 39 million tonnes of untreated sewage that is currently discharged into the tidal River Thames in a typical year.
Mike Weston, Chief Executive of the PiP, commented:
"The involvement of UK pension scheme investors in the Thames Tideway Tunnel project is fantastic news, with UK pension schemes investing over a third of a billion pounds into the project. Traditionally the construction risk carried by greenfield infrastructure projects is too high to be suitable for pension scheme investors, who are typically looking for low risk, long-term, inflation-linked returns that help meet their regular pension payment obligations. But the Thames Tideway Tunnel is a great example of how even greenfield projects can have the risk mitigated to a level acceptable to pension funds."